How has regionalism in the 1990s affected trade?
The authors apply a gravity model to data on annual non-fuel imports for 58 countries for the years 1980-96, to quantify the effects on trade of recently created or revamped preferential trade agreements (PTAs). They modify the usual gravity equation to identify the separate effects of PTAs on intra-bloc trade, members'total imports, and members'total exports. They also formally test the significance of changes in the estimated coefficients before and after the blocs'formation. Their estimates give no indication that the"new wave"of regionalism boosted intra-bloc trade significantly. They found convincing evidence of trade diversion only for the European Union and the European Free Trade Association. For the same blocs they also observed"export diversion", which would be consistent with these blocs'imposing a welfare cost on the rest of the world. Trade liberalization efforts in Latin America have had a positive impact on the imports of bloc members (Andean Group, Central American Common Market, Latin American Integration Association, and MERCOSUR). Increasing propensities to export generally accompanied increasing propensities to import, suggesting that general trade liberalization had a strong effect. The exception was MERCOSUR, for which import and export propensities displayed opposite movements, with exports performing worse than expected over the mid-1990s. Although MERCOSUR members have undoubtedly liberalized since the mid-1980s, these results suggest that their trade performance has been influenced more by competitiveness than by trade policy.
|Date of creation:||31 Aug 1999|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bayoumi, Tamim & Eichengreen, Barry, 1995.
"Is Regionalism Simply a Diversion? Evidence from the Evolution of the EC and EFTA,"
CEPR Discussion Papers
1294, C.E.P.R. Discussion Papers.
- Tamim Bayoumi & Barry Eichengreen, 1997. "Is Regionalism Simply a Diversion? Evidence from the Evolution of the EC and EFTA," NBER Chapters, in: Regionalism versus Multilateral Trade Arrangements, NBER-EASE Volume 6, pages 141-168 National Bureau of Economic Research, Inc.
- Tamim Bayoumi & Barry J. Eichengreen, 1995. "Is Regionalism Simply a Diversion? Evidence from the Evolution of the EC and EFTA," IMF Working Papers 95/109, International Monetary Fund.
- Tamim Bayoumi & Barry Eichengreen, 1995. "Is Regionalism Simply a Diversion? Evidence From the Evolution of the EC and EFTA," NBER Working Papers 5283, National Bureau of Economic Research, Inc.
- Caroline L. Freund & John McLaren, 1999. "On the dynamics of trade diversion: evidence from four trade blocs," International Finance Discussion Papers 637, Board of Governors of the Federal Reserve System (U.S.).
- Thoumi, Francisco E., 1989. "Bilateral trade flows and economic integration in Latin America and the Caribbean," World Development, Elsevier, vol. 17(3), pages 421-429, March.
- Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
- Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
- Aitken, Norman D, 1973. "The Effect of the EEC and EFTA on European Trade: A Temporal Cross-Section Analysis," American Economic Review, American Economic Association, vol. 63(5), pages 881-92, December.
- Faezeh Foroutan, 1998. "Does Membership in a Regional Preferential Trade Arrangement Make a Country More or Less Protectionist?," The World Economy, Wiley Blackwell, vol. 21(3), pages 305-335, 05.
- Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February.
- Alan Deardorff, 1998.
"Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?,"
in: The Regionalization of the World Economy, pages 7-32
National Bureau of Economic Research, Inc.
- Deardorff, A.V., 1995. "Determinants of Bilateral Trade : Does Gravity Work in a Neoclassical World?," Papers 95-05, Michigan - Center for Research on Economic & Social Theory.
- Alan V. Deardorff, 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Working Papers 5377, National Bureau of Economic Research, Inc.
- Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Wiley Blackwell, vol. 20(3), pages 363-368, 05.
- C.A. Primo Braga & Raed Safadi & Alexander Yeats, 1994. "Regional Integration in the Americas: Déjà Vu All Over Again?," The World Economy, Wiley Blackwell, vol. 17(4), pages 577-602, 07.
- Wang, Zhen Kun & Winters, L. Alan, 1991.
"The Trading Potential of Eastern Europe,"
CEPR Discussion Papers
610, C.E.P.R. Discussion Papers.
- Foroutan, Faezeh, 1998. "Does membership in a regional preferential trade arrangement make a country more or less protectionist?," Policy Research Working Paper Series 1898, The World Bank.
- Yeats, Alexander J, 1998. "Does Mercosur's Trade Performance Raise Concerns about the Effects of Regional Trade Arrangements?," World Bank Economic Review, World Bank Group, vol. 12(1), pages 1-28, January.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2156. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.